Microsoft has announced a reduction of nearly 3% of its total workforce.
Although the tech giant did not disclose the exact number of positions being eliminated, estimates suggest it could be around 6,000. As of June last year, Microsoft had 228,000 full-time employees, with approximately 55% located in the United States.
Headquartered in Redmond, Washington, Microsoft indicated that the layoffs will affect all levels and regions, primarily targeting management positions. Notifications were sent out on Tuesday.
“We are continuing to make the organizational changes necessary to ensure our company’s success in a rapidly changing market,” the statement from the company reads.
Earlier this year, Microsoft undertook fewer performance-based layoffs in January. However, this recent 3% reduction marks its most significant workforce cut since early 2023. Other tech firms have also trimmed their workforces by around 10,000 jobs, equivalent to nearly 5%, and are scaling back on growth initiated during the pandemic.
This latest round of layoffs follows Microsoft’s recent announcement of excellent sales and profits that exceeded Wall Street projections for the period from January 3rd to March. The company has consistently outperformed revenue expectations for the past four quarters.
In an earnings call in April, Amy Hood, the company’s chief financial officer, stated that Microsoft is aiming to “build agile, high-performance teams by streamlining management layers.” She also noted that revenues in March were 2% higher than the previous year, reflecting a slight decrease compared to late last year.
hWelcome to Ello and TechScape! I’m your host, Blake Montgomery. In this week’s Tech News: Trump’s tariffs are impacting a tech firm that focuses on physical goods more than those solely digital. We dive into two stories highlighting the dark implications of AI on the labor market. Additionally, Meta has launched a standalone AI application, boasting an impressive claim of 1 billion users due to its rapid adoption. OpenAI has backed down from a controversial version of ChatGPT, and we revisit the early terminology surrounding Elon Musk.
High-tech revenue: bits rake it up, atoms face uncertainty
Four out of seven major tech giants reported their quarterly earnings last week. Meta, Microsoft, Apple, and Amazon exceeded Wall Street projections, yet their outlooks revealed a clear divide between those moving physical products and those thriving in the digital realm. Atomic vs Bits.
Meta and Microsoft’s earnings skyrocketed, surpassing expectations and offering optimistic guidance for the next quarter.
In contrast, uncertainty loomed over Apple and Amazon. While both companies outperformed Wall Street expectations, recent news emphasized the adverse effects of Trump’s tariffs. At the end of Apple’s earnings call, CEO Tim Cook revealed that import tariffs would cost iPhone manufacturers $900 million in the upcoming quarter. Although Apple managed to adapt, planning to ship around $2 billion worth of iPhones from India to the US before tariffs took full effect, it’s still significant.
Last week, Amazon faced backlash from the Trump administration after it was reported that Punchbowl News might begin detailing tariff-related costs for individual items, much like discount retailers Shein and Temu. White House Press Secretary Karoline Leavitt condemned this move as “hostile and political.” Although Amazon considered the idea, it quickly decided not to pursue it and downplayed its competition with Shein and Temu, dubbed Amazon Haul. Following the controversy, the ecommerce titan announced it would cease the initiative.
Is AI taking jobs?
Photo: Science Photo Library/Aramie
Artificial intelligence (AI) is set to greatly disrupt the job market. Reports detail the direct impacts on jobs, leaving many employees in the lurch.
Technology skeptic Brian Merchant discusses Duolingo’s recent shift to an “AI-First” model, phasing out contractors for tasks that AI can manage. His piece, titled Machine Newsletter Blood, features a former Duolingo contractor who expressed disbelief at the rapid exchange for AI. Similarly, artists and illustrators reported losing opportunities as clients opted for AI solutions instead.
However, on a larger scale, immediate disruption following the launch of ChatGPT isn’t anticipated. Research indicates AI’s broader market impact has been slower than predicted. A study from the University of Chicago and the University of Copenhagen published in a Working Paper reveals that in Denmark, “AI chatbots have not significantly affected job revenue or recorded hours.” Rather than completely displacing jobs, AI is expected to enhance productivity, streamlining tasks and fostering new ideas. The study analyzed two comprehensive recruitment surveys encompassing 25,000 workers and 7,000 workplaces across 11 occupations considered vulnerable to AI.
Special thanks to Register for their insights in this paper.
Mark Zuckerberg will be speaking at Llamacon 2025, an AI developer conference in Menlo Park, California, on April 29th. Photo: Jeff Chiu/AP
Personally, I’ve never engaged Meta’s AI chatbots intentionally. I accidentally tapped a discreet blue circle in Instagram’s search bar during the spring of 2024, triggering a chat with AI agents. The chatbot enthusiastically prompted me to “imagine paradise” instead of using my recent search queries. Meta has integrated its AI into frequent sections of its core app.
The strategic placement of the Meta AI search bar and its integration into existing apps is evident. For example, you can easily tap the Meta AI button at the bottom right corner of the iPhone’s WhatsApp app. Meta has optimized the search functionalities across platforms like Instagram, Facebook, and WhatsApp, thereby promoting its rapidly expanding AI user base through prominently featured options. Recently, Meta AI stated it is “on track to become the world’s most utilized AI assistant,” with nearly 1 billion users reportedly engaged with the platform.
Last week, the company unveiled a standalone AI app, raising questions about user engagement without a physical interaction. For now, executives anticipate most users will continue to encounter AI through the conspicuous blue circles within popular social applications. Barge.
Meta isn’t the only player; Google also boasts a significant user base for its AI features, claiming over 1 billion users for AI-driven searches (recently reported as 1.5 billion). While it’s challenging to determine user engagement levels accurately, it’s evident that companies glean benefits from any interactions with their AI tools, making it nearly impossible for organizations like Google or Meta to be compelled to stop using their data for AI training. In the US, users can only request that Meta remove their data or abstain from utilizing it to aid in AI training, alongside chatting with Meta AI, which also includes posts and profile details.
The reality of AI seems grim, as it appears designed to lead users into its ecosystem early on. Within the US, where minimal privacy regulations exist, users often feel as if they are continuously training AI systems without their consent.
Sam Altman’s Rollback and Debut
“We missed Mark”… Sam Altman. Composite: Carlos Barría / Reuters / Guardian Design
Last week, OpenAI confirmed it would retract the latest ChatGPT update, with Sam Altman stating, “I missed the mark with last week’s GPT-4o update.” He described the prior updates as overly sycophantic and bothersome.
According to a venture capital firm, this update marks an unusual error for the creators of ChatGPT. Andreessen Horowitz is among investors in OpenAI.
The day after announcing the rollback, Altman shared news of the launch of his new startup, World, which specializes in ORBs that scan users’ IRIs for verification purposes. He proudly tweeted, “We did that!” alongside an image of himself in front of an American flag, creatively modified with the logo of another company.
Doge Days
“No modern precedent”… Elon Musk’s extraordinary role in the government. Composite: Guardian/Getty Images
The wealthiest individual in the world and a prominent figure in technology held a position in the White House for roughly 100 days. What impact did he have?
My colleague Nick Robbins notes:
“Musk left little of the federal government intact. In just a few months, he dismantled decades of government agencies and public services, which amassed considerable political power.”
“Musk’s influence within the Trump administration is unparalleled. The world’s richest person took on a role that allowed him to undermine the very institutions overseeing his enterprises. His attempts to radically reshape government branches significantly increased his influence, incorporating allies into key positions across federal agencies and gaining access to personal data from millions of Americans while laying off tens of thousands of workers. His leadership at SpaceX positioned the company to capitalize on billions in government contracts, leaving chaos in his wake.”
Discover more about Doge’s initial 100 days.
If you only read two more Elon Musk stories this week, check these out
Apple’s financial results for the second quarter exceeded Wall Street predictions on Thursday.
The tech leader announced a revenue of $95.4 billion, marking an increase of over 4% compared to last year, with earnings surpassing $1.65 per share, up more than 7%. Analysts had anticipated a revenue of $94.5 billion and a profit of $1.62. The company’s market value stands at $3.2 trillion, consistently surpassing Wall Street forecasts for the last four quarters.
Investors remain focused on Apple’s impending financial disclosures. The tech giant has worked diligently to ease the concerns of anxious analysts following Donald Trump’s extensive tariffs that could disrupt the supply chain for appliances. Since the start of the year, Apple’s stock has decreased by 16%.
During a call with investors on Thursday, CEO Tim Cook indicated that he expects tariffs to escalate expenses by $900 million for the quarter ending in June, provided global tariff rates remain unchanged. Cook declined to make further predictions about the future, stating, “We don’t know what will happen with tariffs… it’s very challenging to predict post-June.”
In after-hours trading, the company’s shares dropped more than 4%, despite last year’s growth, due to tariff impacts and revenues that fell short of Wall Street’s expectations, particularly in its services sector, which includes iCloud subscriptions and various licensing revenues. Sales in China also did not meet estimates.
Nevertheless, the company remains optimistic, stating that it reported “strong post-quarter results” and is “actively engaged in the tariff discussion.”
iPhone manufacturers are heavily reliant on production in China for their mobile phones, tablets, and laptops. Following Trump’s implementation of tariffs that reached over approximately 245%, the president indicated he would allow an exception for household appliances.
During this period, Cook communicated with a senior White House official, as reported by the Washington Post. After these discussions, Trump declared an exemption for appliances. Following this announcement, Apple’s shares increased by 7% in subsequent days.
However, the duration of this exemption remains uncertain. U.S. Secretary of Commerce Howard Lutnick described it as “temporary”, and Trump later stated on social media that there would be no “exceptions”.
The president has consistently expressed a desire to see increased manufacturing in the United States. In February, he and Cook met to discuss investments in U.S. manufacturing. “He’s about to start a building,” Trump remarked after their meeting. “A very significant number – you have to tell him. I believe they’ll announce it soon.”
JPMorgan predicts that relocating production to the U.S. will lead to a substantial increase in prices. In this week’s memo, they noted, “Assuming a 20% tariff on China, we could witness a 30% price hike in the short term.” JPMorgan and other analysts assert that Apple may continue to shift more manufacturing to India, where tariffs are only 10%.
Earlier this month, Apple transported around $2 billion worth of iPhones from India to the U.S. to boost its inventory in anticipation of rising prices due to Trump’s tariffs and panic buying by concerned consumers. Investors are increasingly worried about a drop in iPhone sales in China, the largest smartphone market globally. In its latest revenue report in January, Apple disclosed that iPhone sales in China fell by 11.1% in the first quarter, missing Wall Street revenue expectations.
Cook mentioned during a call with investors that while China remains the primary manufacturing hub for the company, India is expected to produce more iPhones along with Vietnam in the June quarter. “The tariffs currently imposed on Apple are contingent upon the origin of the product,” he noted, emphasizing that tariffs in India and Vietnam are less than those in China.
In the immediate term, analysts suggest that tariff-related disruptions could work in Apple’s favor as consumers rush to buy more products fearing price hikes. “Dipanjangchatterjee, principal analyst at Forester, stated: [consumers] absorb these price increases as they seek out Apple products.
On Wednesday, Meta announced its revenues, exceeding Wall Street’s forecasts for yet another quarter, while simultaneously generating billions with artificial intelligence.
In the first quarter of 2025, Meta reported a revenue of $423.2 billion, surpassing both its own projected high of $41.8 billion and the Wall Street expectation of $413.8 billion.
The company also disclosed earnings per share of $6.43, significantly exceeding Wall Street’s prediction of $5.27, leading to a surge in stock prices after market hours.
“This is a strong start to what is set to be a pivotal year for us. Our community continues to expand, and our business model is performing effectively,” stated Mark Zuckerberg, Meta’s CEO. “We are making notable advancements in AI glasses and Meta AI, with approximately 1 billion active monthly users.”
Zuckerberg conveyed in a discussion with investors that the company is performing well, its platform is expanding, and it is prepared to navigate the prevailing macroeconomic uncertainties.
“We maintain the belief that this year will be crucial in our industry,” he remarked.
This marks a continuation of Meta’s succesful track record in surpassing Wall Street expectations over recent quarters. However, it remains uncertain whether this will alleviate investor apprehensions. Analysts expressed dissatisfaction regarding the company’s first-quarter revenue outlook shared at the end of 2024. The firm plans to allocate between $64 million and $72 billion for capital expenditures, focusing on building AI infrastructure, a revision from the previous estimate of $65 billion. Total expenses for the first quarter had already reached $24.76 billion, marking a 9% year-over-year increase. The unpredictable nature of Donald Trump’s tariffs could still disrupt the advertising market and cloud the company’s financial forecast for the upcoming quarters.
Senior analyst Minda Smiley from eMarketer noted that the company’s “optimistic second quarter guidance indicates a lack of expectation for a significant decline in advertising revenue due to tariffs.” However, she expressed doubt about Meta’s ability to avoid long-term recession effects.
“Conversely, companies may take advantage of economic instability. Advertisers are likely to shift their spending towards established platforms like Facebook and Instagram while avoiding smaller social media networks,” added Smiley. “Nevertheless, a significant portion of Meta’s revenue is relying on advertising from Chinese retailers such as Temu and Shein targeting US consumers, whose spending is decreasing due to changing trade conditions and tariffs.”
Meta’s continued spending also “remains a concern for investors,” according to Debra Aho Williamson, founder and chief analyst at Sonata Insights. “Despite this, Meta has stayed away from directly monetizing AI this year, instead focusing on enhancing AI engagement amongst developers, app users, and advertisers,” remarked Williamson.
In the lead-up to the revenue report, Meta has made headlines with mixed AI-related developments, including the release of a standalone AI application intended to compete with ChatGPT. A WSJ Report highlighted that existing chatbots integrated into various products, such as Facebook and Instagram, have enabled teenagers to engage in “romantic role-plays.” Meta executives have consistently emphasized the approximately 1 billion users of their AI chatbots. However, many of these users access chatbots through complex paths within WhatsApp, Instagram, and Facebook. The company has not disclosed specifics about user interactions with chatbots or the depth of these engagements necessary to classify as AI chatbot users.
Alongside ongoing antitrust trials—where the company faces allegations of establishing an illegal social media monopoly through the acquisition of Instagram and WhatsApp—additional concerns loom for analysts regarding Meta’s financial stability, despite the seemingly positive figures.
“Meta’s revenue announcements arrive during a turbulent period, as the company faces potential changes to its future. As discussed in court, the outcomes could fundamentally reshape the social media landscape,” observed Forrester VP Mike Pulx. “Focusing more resources on enhancing Threads and Facebook might be crucial, as these could be the last remaining platforms of value for the company. Additionally, it’s noteworthy that Meta has significantly reduced its workforce within the Reality Labs division, which is struggling and ongoing.”
Tesla experienced its first drop in vehicle deliveries in almost four years, failing to meet Wall Street’s expectations. This indicates that the impact of price reductions is diminishing as car manufacturers face tougher competition and subdued demand.
Since the start of the year, Tesla’s shares have plummeted by nearly 30% and were down 5.7% in early trading on Tuesday.
The world’s most valuable automaker delivered approximately 386,810 vehicles in the first quarter of the year, a 20.2% decrease from the previous quarter, while producing 433,371 vehicles. Wall Street analysts, surveyed by Visible Alpha, had anticipated Tesla to deliver 454,200 vehicles on average.
Compared to the previous year, deliveries from electric vehicle manufacturers dropped by 8.5%. The last time Tesla encountered a decline in sales was in the second quarter of 2020, when the pandemic caused production halts.
The company attributed the decrease in production to preparations for scaling up production of the new Model 3 at its Fremont, Calif., plant, and disruptions at its Berlin plant due to transportation diversions amid the Red Sea conflict and an arson fire. This led to a temporary halt in early March. A left-wing group claimed responsibility for setting fire to a pylon at a German factory that churns out 500,000 cars annually.
In China, Tesla faces tough competition from local companies like BYD, which overtook the American company as the largest EV maker in the last quarter, and newcomer Xiaomi.
Despite this competition, Elon Musk’s company managed to outsell BYD in the quarter, delivering 369,783 Model 3s and Model Ys, along with around 17,000 other models including the Model S sedan, Cybertruck, and Model X premium SUV.
In January, Tesla also cautioned that sales growth would be “significantly slower” this year as it shifts its focus towards producing next-generation electric vehicles.
Microsoft on Tuesday beat analysts’ expectations as its big bet on artificial intelligence paid off, particularly in its Azure cloud computing unit.
The software giant reported revenue of $62 billion, up 18% from a year ago, beating expected profits of $61.1 billion. The Net income increased 33% year over year to $21.9 billion.
CEO Satya Nadella said: “We have moved from talking about AI to applying AI at scale. By bringing AI to every layer of our technology stack, we are gaining new customers and unlocking new benefits in all areas. and boost productivity.”
Microsoft Cloud revenue grew 24% year over year. According to the earnings report, Xbox Content and Services segment revenue increased 61% due to the acquisition of Activision Blizzard. Activision increased the company’s overall revenue by 4%.
Microsoft, which recently overtook Apple to become the world’s most valuable company, last week became the second company in history to have a stock market valuation of $3 trillion.
Microsoft is considered a leading player in the AI space, both through its own efforts and its close relationship with ChatGPT maker OpenAI, of which it is the largest shareholder. In November, Microsoft CEO Satya Nadella played a key role in Sam Altman’s return as CEO of OpenAI after Altman’s shocking firing. Microsoft occupies an observer seat on his OpenAI board.
Jeremy Goldman, Senior Director of Insider Intelligence/eMarketer Briefing, said: “The company’s recent financial performance, which showed an impressive 18% revenue growth in today’s earnings call, is driven by innovation and strategy. “It shows a powerful combination of foresight.” “While peers such as Alphabet and Meta lead the way in his AI industry, Microsoft is solidifying its position as the frontrunner in his AI race.”
Microsoft’s influence over AI development is rapidly expanding, drawing increased scrutiny from regulators and those outside the technology industry. Investors brushed off concerns that the stock would face stronger headwinds as the stock rose 10% over the past month.
The Federal Trade Commission announced last week that it had opened an investigation into the company’s $10 billion investment in OpenAI, as well as its dealings with Google, Amazon, and AI startup Anthropic. Britain’s Competition and Markets Authority is also investigating the deal. European Union regulators said they may launch a similar investigation. The New York Times sued OpenAI and Microsoft in early December, alleging copyright infringement by ChatGPT.
The quarter also marked the first time Microsoft reported revenue with Activision Blizzard, the premier game studio behind hits like Call of Duty and World of Warcraft. Microsoft completed its $69 billion acquisition of the video game maker in October after lengthy back-and-forth with regulators.
Citing job cuts within both companies, Microsoft last week laid off 1,900 employees across its gaming division, including Activision employees and those working on Xbox consoles.
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